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T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Tuesday, August 2, 2022, Vol. 23, No. 147
Headlines
A R G E N T I N A
ARGENTINA: Central Bank Again Hikes Interest Rate, Now at 60%
ARGENTINA: Names Third Economy Minister in a Month Amid Crisis
B E R M U D A
TEEKAY CORP: Egan-Jones Retains B Senior Unsecured Ratings
B R A Z I L
EMBRAER SA: Egan-Jones Retains B Senior.Unsecured Ratings
C H I L E
CHILE: Will Not Grow in 2023, IMF Projects
C U B A
[*] CUBA: Expanded Mexican SME Investment in the Country
P U E R T O R I C O
IGLESIA CRISTIANA: Files Bare-Bones Chapter 11 Petition
T R I N I D A D A N D T O B A G O
WITCO: Profits Decline 18.7%
X X X X X X X X
[*] LATAM: IDB, Green Climate Fund to Promote E-Mobility in Cities
- - - - -
=================
A R G E N T I N A
=================
ARGENTINA: Central Bank Again Hikes Interest Rate, Now at 60%
-------------------------------------------------------------
Reuters reports that Argentina's central bank raised its benchmark
interest rate by eight percentage points to 60%, marking its
seventh hike this year alone, in a renewed push to tame surging
inflation as the country suffers a deepening economic crisis.
The so-called Leliq interest rate set by the country's monetary
authority was previously at 52%, but analysts expect inflation
could exceed 80% this year as the governing coalition is rocked by
growing internal divisions over spending as well as the
tightly-controlled exchange rate, according to
globalinsolvency.com.
A benchmark interest rate above the inflation rate is one of the
points agreed to between Argentina and the International Monetary
Fund (IMF), as part of the lender's $44 billion debt restructuring
deal with the South American country that was finalized last March,
the report notes.
The central bank recently announced the implementation of an
interest rate range to reach real positive interest rates for the
economy, the report relays. It currently stands at between 55% and
70%, according to economists and traders polled by Reuters, the
report adds.
About Argentina
Argentina is a country located mostly in the southern half of
South America. Its capital is Buenos Aires. Alberto Angel
Fernandez is the current president of Argentina after winning
the October 2019 general election. He succeeded Mauricio
Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal
year 2019, according to the World Bank. Historically, however,
its economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
Last March 25, 2022, Argentina finalized agreement with the IMF
for a new USD44 billion Extended Funding Facility (EFF) intended
to fund USD40 billion in looming repayments of the defunct
Stand-By Arrangement (SBA), with an extra USD4 billion in up-front
net financing. This has averted the risk of a default to the IMF
and is facilitating a parallel rescheduling of Paris Club debt.
As reported by The Troubled Company Reporter - Latin America on
July 19, 2022, Fitch Ratings placed Argentina's Long-Term Foreign
Currency Issuer Default Rating (IDR) and Long-Term Local Currency
IDR Under Criteria Observation (UCO) following the conversion of
the agency's Exposure Draft: Sovereign Rating Criteria to final
criteria. The UCO assignment indicates that ratings may change as
a direct result of the final criteria. It does not indicate a
change in the underlying credit profile, nor does it affect
existing Rating Outlooks.
Last April 14, 2022, Fitch Ratings affirmed Argentina's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDR) at 'CCC'.
Fitch said Argentina's 'CCC' ratings reflect weak external
liquidity and pronounced macroeconomic imbalances that undermine
debt repayment capacity, and uncertainty regarding how much
progress can be made on these issues under a new IMF program.
Fitch added that it is uncertain whether the EFF will be a strong
anchor for macroeconomic stabilization. Its policy requirements
are fairly unambitious relative to other IMF programs and in
light of the economy's deep imbalances, but it faces heightened
risk nonetheless from weak political support and spill-overs
from the Russia-Ukraine war, says Fitch.
Standard & Poor's credit rating for Argentina stands at CCC+ with
stable outlook, which was a rating upgrade issued on Sept. 8,
2020. Moody's credit rating for Argentina was last set at Ca on
Sept. 28, 2020.
DBRS has also confirmed Argentina's Long-Term Foreign Currency
Issuer Rating at CCC and Long-Term Local Currency Issuer Rating at
CCC (high) on July 21, 2022.
ARGENTINA: Names Third Economy Minister in a Month Amid Crisis
--------------------------------------------------------------
Patrick Gillespie and Scott Squires at Bloomberg News report that
Argentina's President Alberto Fernandez named Lower House Speaker
Sergio Massa as the head of a new, expanded ministry after the
country plunged deeper into political crisis in July.
Massa will oversee a new Economy Ministry which will include the
duties of the agriculture and production ministries, according to a
statement from the president's press office, according to Bloomberg
News. He will also lead the country's relationship with the
International Monetary Fund, with which Argentina has a US$44
billion program, and all other foreign creditors, the report
notes.
He takes over from Silvina Batakis, who started at the economy
ministry on July 4 after the abrupt resignation of Martin Guzman
and was returning from a trip to Washington, the report relays.
The turnover is a sign of the deep divisions within Argentina's
ruling coalition, the report notes. The growing political crisis
has caused prices to jump and the currency to plunge over the past
month, the report discloses.
Argentina's international bonds surged, with notes due 2030
climbing 2 cents on the dollar to around 22.6 cents on the dollar,
their highest since Guzman resigned at the beginning of July, the
report relays.
The statement did not mention whether Batakis would stay in the
administration, the report noets.
Beyond the economic volatility, Massa inherits enormous challenges.
Economists see inflation reaching 90% this year, the central bank's
reserves are razor thin and the country is behind on the targets it
must meet to comply with a US$44 billion program with the
International Monetary Fund, the report discloses. Almost 40% of
Argentines live in poverty too and a recent slew of protests have
called for more social welfare, the report says.
Argentina's bonds had sunk deeper into distressed territory in
recent weeks, with some touching a low of 17 cents on the dollar on
July 25, as investors have all but lost faith Argentina's
government will be able to put a lid on inflation running over 64%,
the report discloses.
"The gains will likely be temporary," said Jorge Piedrahita, a
managing partner at Gear Capital Partners in New York. "Argentina's
constraints are ideological and political, and that will not change
with Massa," the report notes.
Shifting Politics
Massa is considered as one of most pro-market politicians within a
ruling left-wing coalition that's governed with populist,
interventionist policy, the report discloses. A former mayor of a
Buenos Aires suburb who built his reputation as being tough on
crime, Massa has also shifted his politics over the years,
embodying the Peronist political movement's chameleon-like changes,
the report notes.
He allied with Vice President Cristina Fernandez de Kirchner early
in her presidency, acting as her cabinet chief between 2008 and
2009, the report recalls. He later broke away from her bloc and
ran for president on his own in 2015, finishing in third place, the
report says. Then in 2019, Massa, Kirchner and Fernandez joined
forces again to win the presidential election, the report notes.
Massa brings more political clout than Guzman or Batakis, but it's
unclear if he could move forward with unpopular spending cuts to
comply with the IMF deal that risk even higher inflation and keep
the coalition together. Guzman resigned due to lack of political
support and Kirchner hadn't opined publicly on Batakis yet, the
report discloses.
Replacing Batakis days after she met with staff from US Treasury,
IMF and World Bank is bewildering some members of the ruling
coalition, according to a senior government official who requested
not to be identified, the report relays. Batakis held an unusually
long meeting with David Lipton, senior counsel to US Treasury
Secretary Janet Yellen, to outline her economic road map. The
shakeup erodes the country's credibility, the person added, the
report notes.
Batakis told reporters she had "strong support from all sectors" of
her coalition. She received the news that she might be replaced
while she was still in the US returning back to Argentina, the
official added, the report adds.
About Argentina
Argentina is a country located mostly in the southern half of
South America. Its capital is Buenos Aires. Alberto Angel
Fernandez is the current president of Argentina after winning
the October 2019 general election. He succeeded Mauricio
Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal
year 2019, according to the World Bank. Historically, however,
its economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
Last March 25, 2022, Argentina finalized agreement with the IMF
for a new USD44 billion Extended Funding Facility (EFF) intended
to fund USD40 billion in looming repayments of the defunct
Stand-By Arrangement (SBA), with an extra USD4 billion in up-front
net financing. This has averted the risk of a default to the IMF
and is facilitating a parallel rescheduling of Paris Club debt.
As reported by The Troubled Company Reporter - Latin America on
July 19, 2022, Fitch Ratings placed Argentina's Long-Term Foreign
Currency Issuer Default Rating (IDR) and Long-Term Local Currency
IDR Under Criteria Observation (UCO) following the conversion of
the agency's Exposure Draft: Sovereign Rating Criteria to final
criteria. The UCO assignment indicates that ratings may change as
a direct result of the final criteria. It does not indicate a
change in the underlying credit profile, nor does it affect
existing Rating Outlooks.
Last April 14, 2022, Fitch Ratings affirmed Argentina's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDR) at 'CCC'.
Fitch said Argentina's 'CCC' ratings reflect weak external
liquidity and pronounced macroeconomic imbalances that undermine
debt repayment capacity, and uncertainty regarding how much
progress can be made on these issues under a new IMF program.
Fitch added that it is uncertain whether the EFF will be a strong
anchor for macroeconomic stabilization. Its policy requirements
are fairly unambitious relative to other IMF programs and in
light of the economy's deep imbalances, but it faces heightened
risk nonetheless from weak political support and spill-overs
from the Russia-Ukraine war, says Fitch.
Standard & Poor's credit rating for Argentina stands at CCC+ with
stable outlook, which was a rating upgrade issued on Sept. 8,
2020. Moody's credit rating for Argentina was last set at Ca on
Sept. 28, 2020.
DBRS has also confirmed Argentina's Long-Term Foreign Currency
Issuer Rating at CCC and Long-Term Local Currency Issuer Rating at
CCC (high) on July 21, 2022.
=============
B E R M U D A
=============
TEEKAY CORP: Egan-Jones Retains B Senior Unsecured Ratings
----------------------------------------------------------
Egan-Jones Ratings Company, on July 18, 2022, retained its 'B'
foreign currency and local currency senior unsecured ratings on
debt issued by Teekay Corp.
Headquartered in Hamilton, Bermuda, Teekay Corp is a US-based
company engaged in providing crude oil and gas marine
transportation services.
===========
B R A Z I L
===========
EMBRAER SA: Egan-Jones Retains B Senior.Unsecured Ratings
---------------------------------------------------------
Egan-Jones Ratings Company, on July 19, 2022, retained its 'B'
foreign currency and local currency senior unsecured ratings on
debt issued by Embraer SA.
Headquartered in Sao Jose dos Campos, State of Sao Paulo, Brazil,
Embraer SA manufactures and markets commercial, corporate, and
defense aircraft.
=========
C H I L E
=========
CHILE: Will Not Grow in 2023, IMF Projects
-------------------------------------------
Rio Times Online reports that the International Monetary Fund (IMF)
projected that Chile, unlike the main neighboring economies, will
not grow in 2023.
Although it improved this year's expansion to 1.7%, the outlook for
next year is 0.0%, according to Rio Times Online.
For neighboring economies, the Fund projected a better performance
in 2023 than the local one; and remarked that the situation in
China is having "global consequences," the report notes.
=======
C U B A
=======
[*] CUBA: Expanded Mexican SME Investment in the Country
--------------------------------------------------------
EFE News reports that expanded Mexican investment in Cuba by small
and medium enterprises (SMEs) is a key theme of the Cuba-Mexico
Business Forum, a two-day event that kicked off in Havana.
Cuban President Miguel Diaz-Canel and Prime Minister Manuel Marrero
Cruz were on hand for the inauguration of the forum at the historic
Hotel Nacional de Cuba, as were Mexico's undersecretary of industry
and commerce, Hector Guerrero, and Mexican Ambassador to Cuba
Miguel Diaz Reynoso, according to EFE News.
More than 80 Mexican companies and 150 Cuban firms, mostly in the
tourism, agrifood, cultural, energy and biopharmaceutical sectors,
will participate in the forum, organizers say, the report notes.
Most of the Mexican companies in attendance are small and
medium-sized businesses, according to Guerrero, who said the goal
is for more SMEs to set up shop on the island, the report adds.
=====================
P U E R T O R I C O
=====================
IGLESIA CRISTIANA: Files Bare-Bones Chapter 11 Petition
-------------------------------------------------------
IGLESIA CRISTIANA HEFZI-BA (IS.62) INC. filed for chapter 11
protection in the District of Puerto Rico without stating a
reason.
According to court filings, Iglesia Cristiana estimates between 1
and 49 creditors. The bare-bones petition states that funds will
be available to unsecured creditors.
A meeting of creditors under 11 U.S.C. Section 341(a) is slated for
Sept. 9, 2022 at 09:00 AM via Telephonic Conference Information for
AUST/Trial Attys.
Proofs of claim are due by Dec. 8, 2022.
About Iglesia Cristiana Helfzi-BA
IGLESIA CRISTIANA HEFZI-BA (IS.62) INC. sought bankruptcy
protection under Chapter 11 of the U.S. Bankruptcy Code (Bankr.
D.P.R. Case No. 22-02170) on July 26, 2022. In the petition filed
by Deborah Magaly Alvarez Alvarez, as pastora, the Debtor estimated
assets between $1 million and $10 million and liabilities between
$100,000 and $500,000. Juan Carlos Bigas Valedon, of JUAN C BIGAS
LAW OFFICE, is the Debtor's counsel.
=====================================
T R I N I D A D A N D T O B A G O
=====================================
WITCO: Profits Decline 18.7%
-----------------------------
Trinidad Express reports that Champs Fleurs-based cigarette
manufacturer, WITCO, reported after-tax profit for the six months
ended June 30, 2022 of $152.3 million, which was 18.7 per cent less
than the $187.4 million it earned for the same period in 2021.
For the period January 1 to June 30, 2022, WITCO recorded revenue
of $384.2 million, which was a 6.5 per cent decline compared with
the prior year's sales, according to Trinidad Express.
Total Comprehensive Income declined by $45.0M or 24 per cent over
the same period last year. This reflects reduced profit before tax
of $40.5M or 15.3 per cent; a prior year tax adjustment of $6.0M;
and an actuarial loss of $9.9M net of tax, arising from the
remeasurement of retirement and post-employment benefit obligation,
the report notes.
In her review of the six-month financial results, WITCO chair,
Ingrid Lashley, said the decline in the company's revenue was
driven mainly by lower sales volume locally, offset by increased
sales to export markets, the report discloses.
She said WITCO's domestic sales volumes continue to be impacted by
relatively slow economic activity as the recovery anticipated after
the removal of certain Covid-19 restrictions has not materialized
to date, the report relays.
"More importantly, in the acceleration of the Company's portfolio
transformation, the format for Lucky Strike Red (formerly du
Maurier) was changed to a Super King Size offer. Our feedback
suggests that consumers were hesitant to accept this variant.
"We have taken steps to act on this response and to address
consumer preferences in the shortest possible time. At the same
time, we note a change in purchasing patterns characterised by
increasing appetite for lower-priced products in all categories,"
said Lashley, the report discloses.
She said that the company responded to the change in consumer
preferences by introducing ultra-low-priced offers since Q4 2021,
which have been well received by consumers, the report says.
"Revenue has therefore been negatively impacted by the adjustment
in sales mix for year-to-date 2022. We continue to leverage our
robust distribution network to ensure that our products are
available to all our customers on time and in full," according to
the WITCO chair, the report notes.
She said the company's management is optimistic going into the
second half of the fiscal year based on initiatives to recover
customer confidence in the local market, the report says.
"Despite the financial results for the first half-year, the board
of directors is confident in the strategic agenda and the Company's
focus on generating shareholders' wealth," said Lashley, adding
that given the board's confidence, it will continue its dividend
pay-out programme for this fiscal year, the report relays.
The board recommended an interim dividend of $0.39 per ordinary
share, which will be paid on August 24, 2022 to shareholders of
record at the close of business on August 5, 2022. WITCO also paid
a dividend of $0.39 a share following the first six months of last
year, the report adds.
===============
X X X X X X X X
===============
[*] LATAM: IDB, Green Climate Fund to Promote E-Mobility in Cities
------------------------------------------------------------------
The Inter-American Development Bank (IDB) is joining forces with
the United Nation's Green Climate Fund (GCF) to create the first
regional fund to promote electric mobility and green hydrogen in
Latin America and the Caribbean. The fund is expected to provide
$450 million in concessional loans and grants to nine countries.
The funding will underpin a transition in the region's cities
towards lower carbon emissions and resilient public transportation
by accelerating the use of electric and hydrogen-based public
transportation and by making urban mobility systems more resilient
to climate change. The resources will enable this shift in
Barbados, Chile, Colombia, Costa Rica, the Dominican Republic,
Jamaica, Panama, Paraguay, and Uruguay
"The region's urban mobility systems are under strain. The COVID-19
pandemic dealt a hard blow to public transportation companies,
reducing the number of users and revenue needed to sustain
operations, move away from volatile and polluting fossil fuels and
transition toward more secure energy sources," IDB President
Mauricio Claver-Carone said. "This regional e-mobility fund will
provide the financial resources needed to adopt cleaner
technologies. It will also boost the resilience of transportation
and energy systems."
GCF Executive Director, Yannick Glemarec, said "GCF is pleased to
partner with IDB for the first fund that will promote electric
mobility and green hydrogen in the region. Not only will our
investment of USD 200 million help increase access to low-emission
transportation and strengthen the resilience of the urban transport
infrastructure, it will provide socio-economic benefits to millions
of people in Latin America and the Caribbean."
By increasing access to low-emission transportation, the program
will eliminate 7.5 million tons of carbon dioxide emissions. Its
climate adaptation measure will directly benefit 1.5 million people
and indirectly benefit 9 million, representing 9% of the entire
population of program countries. Benefits include lower fossil-fuel
import bills, improved public- and private-sector mobility
capacity, new green jobs, a fair transition that addresses gender
and other considerations, and a power grid that is more resilient
to climate events.
The IDB and other partners are expected to provide $200 million of
the funding ($195 million in loans and $5 million in grants), and
the Green Climate Fund just approved another $200 million ($145
million in loans and $55 million in grants). The governments of the
nine beneficiary countries are expected to provide an additional
$50 million in local partner funds, for a total initial investment
of $450 million.
Nearly two-thirds of the funds ($284 million) will be used to
finance electrified integrated urban mobility. This addresses the
limited appeal of investing in e-buses, limited experience in
making urban transport infrastructure more resilient, and the lack
of financial support for investments to make this infrastructure
less vulnerable to climate change. This portion of the funding will
finance electric buses, taxis and ride-hailing vehicles, last-mile
delivery service vehicles, and trucks and institutional fleets.
Twenty-two percent of the funding ($98 million) will support
climate-resilient micro mobility infrastructure, including
short-distance vehicles, docking stations, cycling lanes, and
pedestrian streets. These funds will also be used to allocate and
improve the support for urban spaces and infrastructure for public
e-transport, address gender-specific needs, and connect users with
alternative urban transportation options (electric and
non-motorized).
The fund will also finance vehicle-to-grid (V2G) and green hydrogen
pilot projects to assess their viability as ways to increase grid
resilience. V2G consists of using low-emission vehicle batteries as
power storage reservoirs to provide energy during climate hazards.
The program also features a major technical assistance component to
improve the design, enabling policy, regulatory framework, and
business model for private-sector participation given that the
region's cities still lack these conditions for electric and green
hydrogen mobility.
As part of this component, the program will prepare a Gender Action
Plan. The plan will aim to boost female participation and gender
awareness in the electro-mobility sector, increase women's access
to economic opportunities by developing their technical and
entrepreneurial skills, establish incentives for hiring women, and
incorporate gender eligibility criteria into project selection
processes.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2022. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Latin America subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
.
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